OREGON STATE UNIVERSIT Y EX TENSION SERVICE

What Can I Do With My Small Farm?

Selecting an enterprise for small acreage
A. Garrett, C. Bubl, M. Fery, M. Powell, H. Stoven, L. Gwin, and G. Stephenson

W
hen people buy a small farm, they often
simply want someone to tell them what
they can “do” with it. As strange as it
might seem, this isn’t an easy question to answer.
When landowners begin to make important
decisions related to the use of their property,
they might not recognize the complicated web of
details involved.
Before you make decisions about your farm,
it is important to consider three interconnected
questions (Figure 1):
1. What are your goals for the farm?
2. What are the physical resources of the
farm?
3. What are your personal resources and
skills?
Your answers to those questions, plus
information you gather on crop and market
options, will help you choose an enterprise that Figure 1. The major components involved in a farm enterprise
decision and how these factors interact with each other.
makes sense for you and your farm.
Illustration: Chrissy Lucas, © Oregon State University
For example, if your goal is a commercial
enterprise, remember that small farms are
comparable to any small business. They often Amy Garrett, Maud Powell, Lauren Gwin and Garry
Stephenson, Small Farms Program, Chip Bubl, Extension
require long hours, longterm commitment, horticulturist in agriculture, Melissa Fery, Extension faculty
and stamina. As with many highly successful Benton County, and Heather Stoven, research assistant; all of
small businesses, they require a risk-taking, Oregon State University

E C 1529
Revised February 2016

1
entrepreneurial spirit. However, a small farm
without a commercial venture can also provide a
great lifestyle.
Your physical resources (i.e., type of soil on your
farm) influence what crops you can grow. That, in
turn, influences the level of potential gross farm
income, if you choose to sell your crops. Your
personal skills (i.e., you enjoy interacting with
customers) will influence how you choose to market
your products.
I. Goals for the farm
The owners of small farms vary in both resources
and aspirations. Many people are interested in
having a few animals, growing some fruits and
vegetables, and providing a high-quality rural
lifestyle for their families. Others seek to manage a
small farm intensively to produce an income.
The goals you set for your small farm must
realistically consider the needs and values of family
members, your financial situation, the farm- or
business-related talents of family members, and
more. Do you view the farm as a “homestead” and a
way to achieve quality of life for the family, or do you
Small farms vary in both resources and aspirations, with
goals ranging from homesteading to producing an
income.
Photo: Melissa Fery, © Oregon State University
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want the farm to operate as a business and produce
an income for your family?
A. Homesteading
Rural areas are attractive places for families to
live. A great deal of satisfaction can come from
experiencing farm life without the pressure to make
a profit. In this situation, off-farm income supports
the farm’s activities.
In addition, many small-farm families wish to
replace some of their purchased food with some
homegrown foods. This can be extremely satisfying
and surprisingly easy. Depending on conditions,
2 acres will produce a year’s supply of vegetables,
ample fruits and berries, and some meat. Another
2 acres of well-managed woodlot can heat a well-
constructed house indefinitely. This path is different
from a commercially focused farm but is very
appropriate for many families.
B. Farm business
Farming in order to produce income is serious
business. It should be approached with thorough
planning and realistic expectations. Consider these
questions:
■■ Are you realistic about how much income you
expect to earn?
■■ Do you have the necessary startup funding? If
not, how will you obtain it?
■■ Who will do the work?
■■ Do you have or can you obtain the necessary
business skills to help the farm succeed?
On most small parcels, land prices are not based
on the value of the land for use as a farm. Most small
parcels sell for their real estate market value rather
than for what a conventional farmer would consider
a “fair farm” price. The rental value of farm land is
$75 to $300 per acre annually but the cost of buying
land is typically much higher.
It is challenging to expect such a parcel to pay
for itself, much less the cost of the house or other
nonfarm improvements. However, with intelligence
and persistence it is possible to make money from
a small farm. Many small farms in Oregon are
producing excellent crops that are marketed in
creative ways. The potential definitely exists.
Growing a crop that you enjoy working with and believe in will get you through
hard times and help you market it.
Photos: Lynn Ketchum, © Oregon State University
II. Physical resources of the farm
Not all farms are created equal. They vary
widely in the types of crops they can grow. A farm’s
capability to grow various crops is related to its
physical resources: soil types and slope, access
to irrigation water, and climate. These physical
resources might seriously restrict the types of crops
that can be grown or might provide nearly unlimited
options. Successful farming relies on your ability to
choose crops that match your farm’s capability.
A. Land—types of soils
Soils are complex mixtures of sand, silt, and clay.
The relative abundance of these soil components
determines which soil type you have. The types
of soils on your farm are directly related to crop
options. The better your soil, the more options you
have. Some soils can be improved by enhancing
drainage and soil tilth but will never be as versatile
as soils with few limitations.
Soil maps, published in soil surveys for each
county, allow you to identify the soil types on
any land parcel. Soil surveys include descriptions
of each soil type and give some indication of the
soil’s strengths and weaknesses for agriculture and
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Sending a composite sample of your
soil to a lab will provide information
needed for understanding crop
growth.
forestry. To learn more about your soil types, access
the Web Soil Survey online (see sidebar, page 4).
A soil nutrient analysis (soil test) is a next step to
better understand your soils. Collecting soil from
your property and sending a composite sample to
an analytical laboratory will provide information
needed for understanding crop growth factors
such as pH, buffer pH, organic matter, and nutrient
content. For a complete guide on how to take a soil
sample, see A Guide to Collecting Soil Samples for
Farms and Gardens (EC 628).
Understanding soil types should greatly influence
any land investment decision. You may also need
a certain critical acreage to produce some crops
economically. For example, growing grain for a
wholesale market on less than 200 acres may not
support the purchase of all the equipment needed
to grow and harvest the crop. While garlic can be
produced on small plots of 1 acre or less (using hand
labor and a rototiller), 5 acres is probably needed to
justify a fully mechanical operation and provide for
crop rotation.
If you are planning to grow higher-value specialty
crops, you will be better off with 5 to 10 acres of land
with Class I soil, a water right, and strong markets
 Web Soil Survey
The U.S. Department of Agriculture Web Soil Survey can help you create a soil map of your property.
You’ll be able to identify the types of soil you have and learn more about how they function, including
infiltration, available water holding capacity, depth, structure, restrictive features or limitations such as risk
of erosion and compaction, and capability class. If you are planning to purchase property, taking a look at
the soil’s capability class and matching it with the crops you plan to grow is the best first step.
http://websoilsurvey.sc.egov.usda.gov.

Soil Capability Classifications

Class I soils Soils have few limitations that restrict
their use.
Class II soils Soils have moderate limitations.
Class III soils Soils have severe limitations for
growing cultivated crops.
Class IV soils Soils have very severe limitations for
growing cultivated crops.
Class V–VIII soils Limitations are impractical to remove
or unsuitable for cultivation.
Soils are capable of growing nearly any crop.
Soils are capable of growing most crops but may
require some conservation practices.
Soils may require conservation practices such as
artificial drainage or erosion prevention to grow
cultivated crops.
Soils will require very careful management.
These soils may be suitable for permanent
pastures, forestland, or wildlife areas.

nearby. If you are interested in livestock and grazing

systems, larger tracts of isolated farmland with
marginal soils may be ideal and available at a lower
cost per acre.

B. Water—potential for irrigation

Water is another critical resource that determines
crop options for your farm. Most, although not all,
high-value crops require irrigation beyond natural
rainfall. Nurseries are heavy users of irrigation,
as are many vegetable operations. In areas such
as western Oregon, Christmas trees, wine grapes,
garlic, rhubarb, asparagus, grains, and hay can be
grown without irrigation. In certain conditions,
strawberries, raspberries, and some vegetable crops
(e.g., tomatoes, potatoes, pumpkins, watermelons,
cantaloupes, winter squash, zucchini, corn, and
beans) can also be grown without irrigation, though
there could be impacts on quality, yield, and plant In certain conditions, some vegetable crops, like this
vigor. Several Extension publications detail crop ‘Allure’ sweet corn and ‘Dark Star’ zucchini in Shively,
California, can be grown without irrigation using dry
water-use requirements at various locations in farming management practices.
Oregon. The estimates take into account irrigation
Photo: Amy Garrett, © Oregon State University
method, crop growth stage, and weather.
In Oregon and other western states, water
resources are controlled by state authorities and

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 Irrigation resources
Western Oregon Irrigation Guides (EM 8713), for farmers in the Willamette Valley, cover the primary
field, row, and orchard crops. These guides give an overview of the decisions and factors that go into
irrigation system design, operation, and maintenance. They include 16 crop-specific fact sheets that cover
many of the major crops grown in the valley. For information on irrigation and water usage in eastern
Oregon visit http://www.cropinfo.net/water/waterUsage.php.

Find out more about your water rights

In Oregon, contact the Water Resources Department, 158 12th St. NE, Salem, Oregon 97310.
Phone: 503-378-2496. Web: http://www.oregon.gov/OWRD/pages/index.aspx.
This page provides a map and contact info for Oregon watermasters: http://www.oregon.gov/owrd/
pages/offices.aspx#region_watermaster_map.

are distributed to landowners as “water rights” (the Domestic well exemptions

right to use a specified amount of water) based on Most rural properties have a domestic well,
historic use and the quantity of water available for which is intended to supply up to 15,000 gallons
agricultural use in a given year. This system prevents per day for household use. A domestic well may
one landowner from damming a river that serves also be used to irrigate up to ½ acre of lawn and
many other landowners and provides minimum noncommercial garden and provide drinking
stream flows for fish, recreation, and other beneficial water for livestock.
uses. If water resources in a basin become limited,
those with the oldest water rights get the water. Current statute (ORS 537.545)
Your ability to irrigate is based on your farm’s
water rights. Water rights determine whether your
farm may access irrigation water—and how much—
from designated irrigation wells on your property,
rivers, streams, or other bodies of water.
Rainwater captured and stored from artificial
impervious surfaces such as roofs or driveways is
exempt from these rules.
If your land does not already have water rights,
you might not be able to get them. Check with
your local watermaster about water rights attached
to a particular parcel or about the potential for
the development of new water rights in your area.
Water rights transfer with the property if a farm is
sold. Domestic wells may not be used to irrigate a
commercial agricultural crop.
Water quality concerns such as salt content, pH,
bacteria, or specific minerals in the water can affect
its suitability for irrigation, food safety, and domestic
use. It is recommended to have a detailed water
analysis done before purchasing a property with Each use is a separate exemption. For example,
existing water rights from a well or surface water irrigation of lawn and garden is not included in the
source. A list of accredited labs is available at: 15,000-gallon-per-day exemption. One well could
http://lams.nelac-institute.org/search. serve multiple exempt uses.

Illustration: Oregon Water Resources Department

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C. Climate and microclimate
Climate and microclimate both influence what
can be grown on any given farm. A geographic area’s
climate refers to the generally predictable patterns
of temperature and rainfall across the seasons. Your
climate zone will affect which crops you can grow
(e.g., bananas or apples), based on the plant’s ability
to survive the area’s temperature extremes and the
potential for enough heat to mature the crop. Some
crops must accumulate a certain number of heat
units (“degree days”) in order to grow and mature.
Many crops require more degree-days than are
available in some locations.
The number of frost-free days (i.e., length of
your growing season) is another way to define
your climate. Oregon’s Willamette Valley has
approximately 150 to 250 frost-free days per year.
In central Oregon, frost-free days range from 80
to 100 per year. Oregon’s coastal areas are similar
to the Willamette Valley, but temperatures don’t
get warm enough to ripen certain crops, including
most tomato varieties and certain grape varieties.
Considerations such as sun exposure, rainfall
amounts and pattern, and air movement are also
critical to success for many crops.
The crops already grown in a geographic area are
a reasonable indication of climatic limitations. If
your proposed crop is not grown locally, there might
be some very good reasons for its absence. This does
not necessarily mean it cannot be grown, but there
may be significant limitations to its production that
you must discover and address. New varieties being
developed may also be considered.
Plant Hardiness Map
The U.S. Department of Agriculture Plant
Hardiness Zone Map is the standard by
which gardeners and growers can determine
which plants are most likely to thrive at a
location. The map is based on the average
annual minimum winter temperature,
divided into 10oF zones. Detailed, searchable
maps are available at http://planthardiness.
ars.usda.gov.
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Crop modeling tool
CROPTIME is a vegetable degree-day modeling
tool that can help schedule planting to meet
harvest targets for the season. During the summer,
actual weather data is used to automatically
improve harvest predictions. CROPTIME
also informs users about weed and nitrogen
management. For more information visit:
http://smallfarms.oregonstate.edu/croptime.
Climate change and increased weather variability
are also important factors affecting crop choices
and management decisions. Potential impacts
include reduced snowmelt, which will limit summer
irrigation, and higher temperatures and drought,
which are likely to increase plant diseases, insect
pests, and weeds, as well as cause heat stress for
crops and livestock.
Oregon has two major climatic areas and many
variations within each one. The mild, maritime
climate on the west side of the state favors many
crops. It is estimated that more than 800 crops
have been grown in the Willamette Valley. Yet, dry
summers require irrigation for most high-value
crops. The east side of the state (including central
Oregon) is more arid and tends toward extremes of
heat and cold. Hardy, dryland types of crops tend
to be better choices, although irrigation opens up
numerous other crop options.
Microclimate is related to more localized land
variations, such as how air drains and collects on the
land and how natural features, such as small bodies
of water, moderate temperatures. The tendency for a
farm or a specific area on a farm to have early or late
Illustration: U.S. Department of Agriculture
 USDA Regional Climate Hubs
The U.S. Department of Agriculture established
seven regional climate hubs in 2015 to help
agricultural producers mitigate the effects of
climate change. The climate hubs are intended to
streamline efforts to respond to climate change
and prepare for the challenges of drought,
heat stress, excessive moisture, longer growing
seasons, and changes in pest pressure. The Pacific
Northwest Hub is based in Corvallis, Oregon. For
more information, visit http://www.usda.gov/oce/
climate_change/hubs/NorthwestFactSheet.pdf.
frosts (or no frost at all) that are different from the
surrounding area is an example of a microclimate.
A microclimate can make it possible to grow a crop
not normally grown in an area, or it can make it
impossible to grow some crops that are grown on
surrounding farms.
Altering the climate equation takes skill and
resources but can be done to grow particular crops.
Here are some examples:
■■ Farming regions in Switzerland have built
rock terraces to plant wine grapes. Rocks hold
the heat of the day and create a microclimate
around the vines that allows the grapes to
mature where otherwise they would not.
■■ Installing field drain tile will help move water
out of the profile more quickly (important for
early tillage) and warm the soil as well. This is
important for early seed or transplant growth.
■■ Use of transplants (purchased or farm
produced) gives your vegetables and flowers an
early start.
■■ When planting outside, you can use row covers
to increase heat and improve plant growth in
the early season. Hoop houses can do this on a
larger scale and for a longer time.
These examples show you how you can modify
your microclimate to produce crops that otherwise
would not do as well on your farm. Modifications
will have an associated cost, so keep in mind
that you may be competing in the marketplace
with farmers who don’t have those costs and may
therefore have a pricing advantage.
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III. Personal resources and skills
A. Skills and values
Whether your enterprise fits your family’s
goals and abilities is a big factor in its success. For
example, families often take on a farming enterprise
based solely on financial goals. They might discover
they really do not enjoy the crop they grow, and the
work becomes drudgery. Here are some things to
consider:
Use your strengths:
■■ What do you love to do? Growing a crop that
you enjoy working with and believe in will get
you through hard times and help you market
it. Don’t force yourself into a type of farming
based solely on external factors. If your real
love is working with animals, you might not be
happy owning a nursery.
■■ What do you know how to do? In addition to
growing things, farming is made up of many
important skills—mechanical, bookkeeping,
problem solving, management, marketing,
and so on. Involve yourself and other family
members in farming tasks for which they have
some related training.
■■ What do you do well? People have a variety of
abilities—for example, a knack for nurturing
calves, growing bedding plants, or engaging
with customers.
It’s important to read everything you can get your hands
on and to talk to all sorts of people about the enterprise
you are considering.
Photo: Teresa Matteson, © Oregon State University
 Be aware of how you and your family want to live:
■■ Understand the production calendar for the
crop you are considering. How do you feel
about the schedule? Does it fit with off-farm
work schedules? Does your family like to take
a long vacation during the summer? How
important are holidays? For example, if you
plant Christmas trees, harvest may interfere
with winter holidays.
■■ Do you like to manage people? Are you
willing to hire and manage outside help? As
you consider expanding a farm operation,
remember that you will need to hire
and manage more employees. If you are
considering agritourism, how public do you
want your farm and life to be?
■■ Direct marketing usually involves a lot of
contact with people, including many new faces
on a regular basis. Do you like interacting with
people?
■■ Livestock need to be cared for 24 hours a day,
7 days a week. If you want to have animals,
how will you plan for this?
■■ Is the whole family excited about farming?
Moving to a rural environment can cause
stress to family members who prefer a more
urban lifestyle.
■■ What is your comfort level with risk? Do you
thrive on a bit of it, or does it scare you? Some
crops pose little financial risk but promise
little income. Other crops have the potential
for greater profits but pose higher levels of
production and market risk.
B. Risk
Farming, as with any business, involves financial
risk. All crops require you to spend money in
advance to establish the crop. What is returned
when the crop is harvested is determined by the
skills of the farmer, the weather, and what happens
in the market. Some crops, such as tree fruits, might
require several years before any income is realized.
Potential crop failure, sometimes several years in a
row, is a potential risk that needs to be recognized.
Knowing in advance where you stand financially and
your capacity for taking risks will influence the types
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of choices that best fit your situation. Consider the
following questions:
■■ What can you invest in startup and operating
costs without putting your family at financial
risk?
■■ How long can you wait for the crop to begin to
create some cash flow? How long can you wait
for the crop to generate some profit?
■■ How much can you afford to risk financially
due to fluctuations in the market? If the
market price is high when you plant but low
when you harvest, what will happen?
■■ How much time and money can you allocate
toward selling your crop?
■■ What financial obligations are you taking
on with the farm? Make up cash flow and
enterprise budgets and frequently re-evaluate
them against your experience.
■■ What are your benchmarks for success, and
when is it time to change your strategy?
■■ What if frost wipes out your crop or disease
hits your herd? Can you survive the highs and
lows of an agricultural business? What crop
insurance options are available for the crops
you are growing?
Your answers to these questions may change
over time as you gain experience. It is important to
reassess on a regular basis, perhaps every season.
C. Access to capital
For many new farmers, it can be a challenge to
finance a new agricultural business. Often, new
farmers launch their enterprises using family
resources, including off-farm income. For most
small farmers, financing (loans from banks and
other lenders) is generally available after they can
show several years of successful experience.
USDA’s Farm Service Agency (FSA) now offers
a suite of financing options specifically designed
for beginning farmers, veterans wishing to enter
farming, and limited resource farmers. These options
include loans to purchase land, operating loans, and
microloans. In the Pacific Northwest, Northwest
Farm Credit Services also offers an array of such
programs (in addition to banking and insurance
services).
 In addition, cost-share programs offered by
USDA’s Natural Resource Conservation Service
(NRCS) can fund some infrastructure projects, such
as high tunnels, some types of fencing, and water-
conservation projects.
If you decide to seek financing, consider these
issues:
■■ Small farms may lack “bankable” equity, so
lenders want tangible evidence that you can
produce crops and sell them at a profit. A
small farm might be well capitalized with two
incomes but have little hard collateral or loan
history. Keep good records, including any farm
tax records (Schedule F), to demonstrate credit
worthiness.
■■ Experience is the hardest quality to prove and
the most difficult one for a lender to assess.
A documented, 3-year track record showing
successful progress for the farm is the best
information you can bring to the table. Learn
to keep meticulous records and analyze them
from a business perspective.
■■ Small farmers represent a large part of the
potential credit market in terms of numbers
but not in loan volume. From a bank’s
perspective, the earning potential from a large
loan is much greater than that from a small
one while the same time and paperwork are
needed for both.
■■ If the first mortgage on a property is
large relative to a conservative estimate of
liquidation value, it might be tough to get an
operating loan.
■■ Lenders want to see that you and the farm
have the capacity to weather both mistakes
and external factors like changes in markets or
rising input costs.
It is not impossible to secure credit, but it takes
a lot of planning and a solid financial record. Many
small farms use personal credit cards to start or
expand their farms, though this method is risky and
expensive.
When you do get a loan, plan very carefully
how you will use the money. Most successful farms
use debt wisely, spending borrowed money for the
greatest benefit for the business.
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Programs to help with financing
Farm financing assistance can come in many
forms including:
■■ Traditional bank loans
■■ Federal programs
❍❍ USDA
❍❍ Farm Service Agency
❍❍ Natural Resource Conservation Service
(NRCS)
■■ State programs
❍❍ Beginning and Expanding Farmer Loan
Program (Aggie Bond Program)
■■ Individual Development Accounts (IDA)
■■ Microloans
■■ Local Small Business Development Centers
Resources to help you navigate these and other
financing options include:
Friends of Family Farmers:
http://www.friendsoffamilyfarmers.org/
Center for Rural Affairs:
http://www.cfra.org/resources/beginning_farmer/
fundingsources
USDA Small Farm Funding Resources:
http://ric.nal.usda.gov/small-farm-funding
IV. Selecting an enterprise
Once you have a sense of your goals, physical
resources, and personal resources and skills, it’s
time to explore crop and market options so you
can choose what to grow and how to sell it. Here
is some initial guidance, but we encourage you to
read everything you can get your hands on and talk
to all sorts of people about the enterprise you’re
considering.
A. Types of crops
Before you decide on a crop, you should know its
biology, equipment needs, and marketing options
in some depth. Your choice of farming method
(i.e. organic or conventional) will affect the costs
associated with establishing and operating your

farm, the amount of income from products grown,
and how and where products are marketed.
The easiest crops to grow are those that have a
long production history in your area. Traditional
crops or varieties provide some security and few
surprises other than weather and prices. If a crop
has been grown in your area for a long time, there
will be equipment, custom operators, and plenty of
free advice. These products vary based on Oregon’s
climate zones but may include familiar options
such as peas, salad greens, tomatoes, corn, potatoes,
sheep, cattle, and so on.
If you are considering a new or nontraditional
crop, plan to do a great deal of advance research and
on-the-job learning. These crops might be new to
your area or even to the nation. There may be little
production, post-harvest, or marketing information
available. The consolation is that when you have
perfected the production system, assuming the
product appeals to the public, you will be ahead of
your competition.
For any crop, you will need time to learn how
to grow it. Even if you think you might do things
differently, it’s a good idea to learn the traditional
production system for that crop first. In many cases,
it’s possible to start on a small scale to give you a feel
for production issues. Remember that difficulties
tend to compound as the size of the cultivated area
increases.
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Before you invest any
significant amount of
money in a crop, you
should know the crop’s
biology, production
technology, and
marketing options in
some depth.
Photo: Lynn Ketchum,
© Oregon State University
Look for enterprises that can grow incrementally,
without major new investments in land or
equipment, as your skills, finances, and marketing
ability increase. Examples include container stock,
fresh vegetables, sheep, laying hens, and beehives.
Look for parts of the production system you can
contract out while you learn the rest of the process.
For example, you could learn to grow container
nursery stock by buying rooted cuttings at first
rather than building a greenhouse and propagating
the cuttings yourself.
Crop rotation—not growing the same crop on the
same land each year—is important for most crops
for disease and weed management. Keep in mind
that rotation requirements will increase your acreage
needs.
It’s helpful to have a realistic estimate of the
potential production costs and income from
each crop you plan to grow. Don’t forget about
harvest and market costs: for example, blueberries
usually cost 55 to 60 cents per pound to harvest
and transport. (See The Costs of Establishing and
Producing Blueberries in the Willamette Valley,
http://arec.oregonstate.edu/oaeb/files/pdf/AEB0022.
pdf.)
Finding farm labor for harvest can also be very
challenging. A heavy-yielding blueberry crop
requires more upfront cash for harvesting and

Growing a diversity of crops can spread the risk of changes
in the growing environment or market price in a given
year.
Photo: Melissa Fery, © Oregon State University
delivering the crop to market than a lighter crop
does.
Let’s look at some of the options. Table 1 (page
12) shows costs and gross returns per acre for a
variety of crops as reported from farms, both large
and small, in Oregon.
These values are for conventional crops sold into
traditional wholesale markets; they do not represent
the higher gross receipts from direct marketing or
organic and other certifications used by many small
farmers. However, these values are a useful place to
start and offer valuable comparisons.
The key point to take from the table is that crops
differ in terms of their establishment costs, annual
costs (labor and inputs), how long you have to wait
until you get a commercial harvest, and what you
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Crop costs and returns
For more detailed information on crop costs
and returns, visit the National Agricultural
Statistics Service (NASS) Web site at http://www.
nass.usda.gov/. NASS has information for each
state by commodity with some historical data,
though information is limited for some specialty
crops. Enterprise budgets are also available for
many crops and contain useful information on the
costs of specific activities involved in producing
and marketing a crop. Use Web search terms like
“enterprise budget+vegetables+university.” You
can contact your county Extension office for more
information or visit the OSU Extension catalog at
https://catalog.extension.oregonstate.edu/.
gross—which itself will vary based on what market
channel you choose.
Also note that direct operating expenses on
most crops in this table are 50 to 60 percent—or
more—of gross returns. For example, an acre of
nursery stock (container) has annual operating costs
of $18,000 to $40,000 and gross revenue of $20,000
to $60,000. In addition to annual costs, you also need
to plan for initial capital investment in facilities (e.g.,
greenhouses or winter houses or both) in addition to
those operating expenses. This is cash up front, and,
for nursery stock, $5,000 to $9,000 is a minimum.
The nursery example also demonstrates that it
is possible to land on the wrong side of costs and
returns. If costs are higher than expected and returns
(yield or price received or both) are much lower,
Continued on page 13
Crops differ in terms
of their establishment
costs, annual costs
(labor and inputs),
how long you have to
wait until you get a
commercial harvest,
and what you gross.
See Table 1 (page 12)
to compare livestock
and forage to nursery
and greenhouse.
Photos: Tiffany Woods
(left) and Lynn Ketchum,
© Oregon State University
 Table 1—Crop production costs and returns per acre
Type of crop Est. cost/acre Annual cost/acre Gross returns/acre
Perennial (or semi-perennial) crops
Xmas trees
D. Fir 2,000-3,000 1,300-6,0001 8,000-13,000 (at 6-yr harvest)
T. Fir 2,300-3,000 1,500-7,000 1
14,000-21,000 (at 8-yr harvest)
Blueberries 8,000-9,000 2
4,500-13,000 1
6,000-15,000 (full production)
Apples 10,000-13,000 2
5,500-6,500 1
6,000-9,000 (full production)
Wine grapes 8,000-10,0002 3,500-4,0001 4,000-7,000 (full production)
Hazelnuts 2,500-4,000 2
500-900 1
1,700-6,000 (full production)
Greenhouse and nursery
Container 18,000-40,0003 20,000-60,000 (at harvest)4
Bare root 6,000-18,0003 8,000-20,000 (at harvest)4
Annual crops
Lettuce/crop5 5,000 7,200
Radishes/crop 5
5,000 6,000
Garlic (fresh) 4,000-8,000 3,000-15,000
Wheat (West O) 500-600 500-900
Cut flowers 10,000-50,000 6
20,000-60,000
Forage and livestock
Grass/legume hay 6007 125-200 150-375
Cow/calf 1,500 8
550 9
800-1,000 (for 2 acres)10
Sheep 1,20011 50012 900-1,100 (for 2 acres)13

Greenhouse and nursery sources—returns for 2010 plus industry contact information
http://www.nass.usda.gov/Statistics_by_State/Oregon/Publications/Horticulture/2010_nursery.pdf
http://www.lsuagcenter.com/NR/rdonlyres/4371C661-291B-4551-9FE4-FCF116336ACC/49856/2008OrnamentalB
udgets.pdf (non-local but decent comparative cost data)
Cut flowers: Penn State and other sources: http://extension.psu.edu/business/ag-alternatives/horticulture/cut-
flower-production#section-15

Notes: 5. One crop cycle with the possibility of several crops weight by October equal to 525 pounds, and the
1. The higher end of the annual cost cycle comes in per summer on the same ground current high feeder auction prices of about $200
the year of harvest and incorporates harvesting 6. Good quality cost-return information on field to $240/cwt. 1 cow = 0.85 calf x 525#s = 446#s
costs. grown flowers very difficult to come by. Marketing @ $2.20/# = $982 per 2 acres.
2. Cumulative costs up to full production. is very complex. 11. Covers cost of ewes (initially)
3. Nursery crops harvested typically 1 to 4 years after 7. Covers costs of planting and other miscellaneous 12. Covers pasture maintenance expenses, purchased
initial propagation. start-up costs. Nonirrigated. quality winter feed for 150 days, and veterinary
and miscellaneous costs.
4. Older plants are generally worth more per plant 8. Covers cost of bred cow (initially)
(assuming they aren’t too old) but have more 9. Covers pasture maintenance expenses, purchased 13. Based on 6 ewes per 2 acres of good pasture, a
money and time invested in their culture up to quality winter feed for 150 days, and veterinary 130 percent lambing rate, lambs weigh 90 pounds
time of sale. The number of container or bare root and miscellaneous costs by October and the current medium high auction
plants grown per acre decreases as the plant size prices of $150/cwt for feeders in this range.
gets bigger. 10. Based on one cow-calf pair per 2 acres of good 6 ewes x 1.30 = 7.8 lambs @ 90#s =702#s @
pasture, an 85 percent herd-calving rate, calf $1.50/# = $1,053 per 2 acres.

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you may end up in the red. A new business is more
fragile than an established one, and such a loss can
be devastating.
The profitability of any farming enterprise, large
or small, is difficult to predict. You also must identify
what you mean by profitability. Does it mean just
staying in the black for a specific crop? Does it mean
providing a small supplemental income? Does it
mean providing a full family income? Small farms
can provide all of the above, given good resources
and skills.
Growing a diversity of crops can spread the risk
of changes in the growing environment or market
price volatility in a given year. Yet it can also be risky
to grow too many crops, particularly if they require
very different skills and equipment.
B. Marketing
Marketing is crucial to small farm success. Before
you decide what to grow, spend some time assessing
customer demand. Who will buy what you sell, and
how much might they pay?
In general, small farmers focus their marketing
efforts on selling directly to consumers in order to
capture the full retail price for their products. Small
farms are almost always at a disadvantage competing
against large farms in most wholesale markets. Large
farms are able to produce greater volumes of product
over a longer time period at a lower cost; they may
also have more on-farm infrastructure to support
the longer shelf life and other product qualities
wholesale buyers often demand. For these reasons,
most successful small farmers choose to market
most or all of their product directly to consumers via
one or more of the following methods:
■■ Farm stands
■■ Farmers markets
■■ Community-supported agriculture (CSA)
■■ Web sales
■■ U-Pick
■■ Other direct-marketing techniques
Specialty wholesale channels that can work well
for small farms include:
■■ Restaurants
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■■ Some schools, hospitals, and other institutional
buyers
■■ Small and mid-scale, independent retailers
focused on organic and sustainable food,
especially retail food cooperatives.
Different market channels have different
requirements and challenges. For example, each
farmers market has its own rules, and selling at
market requires a full day off the farm, often on the
weekend.
Before choosing where you will market your
products, do some market research. At its most
basic, market research means learning about your
potential customer base and your competition for
those customers. Consider asking the following
questions:
■■ Who is your target audience?
■■ Who are the other small farms in your area?
What do they sell and where, and how much
do they charge?
■■ What farms are growing and selling the crops
you plan to grow?
■■ What niches—specific products, gaps in
availability, marketing methods—are not being
filled in your area?
■■ How is your product or story different from
the competition?
You can answer these questions by visiting local
farmers markets, farm stands, and retail markets.
A small farm with a mix of high-quality products
and a good plan for getting those products into the
hands of consumers can be very successful. Oregon
is home to many small farms that profitably produce
nursery stock, culinary and medicinal herbs,
specialty livestock, tree fruits and berries, vegetables,
and numerous other crops. These farms often make
and sell value-added products, such as fruit jams and
pickles. Agritourism enterprises are also popular for
small farms and include farm stays or farm-based,
Most commercial enterprises will require
some level of license or permit or both. See
Keeping It Legal (http://smallfarms.oregonstate.
edu/sites/default/files/small-farms-tech-report/
trrefgorgrowandsell.pdf) for information and links
to pertinent agencies.
bed-and-breakfast operations, farm-to-table dinners,
pumpkin patches, farm stands, and U-pick.
V. Some other factors to consider when
selecting an enterprise
Farm community. An active farm community
promotes group learning, innovation, and
cooperation. Many farm communities interact
and stay connected through online communities
with email lists and social media. For example, in
Oregon there are several women’s farming networks,
facilitated by Oregon State University, that use email
and Facebook to ask questions, source equipment,
sell their products, and coordinate potlucks and
skill-building activities (more at http://smallfarms.
oregonstate.edu/node/175731). Quality suppliers
of equipment, services, and information are more
available where there is a “critical mass” of farmers.
Nevertheless, isolated farmers can find and build
community through commodity organizations
and take other steps to improve their technical and
marketing skills.
Isolation. If you are geographically isolated, you
must carry larger parts and supply inventories, and,
most significantly, you probably cannot contract as
easily for custom farm work. Thus, you must have
the ability and equipment to do all of the work
yourself. This requires a higher upfront investment
in capital, time, and skills. In addition, it may be
more difficult to attract buyers for the crop if you
rely on them coming to you.
Farm accessibility. Your farm’s location can have
a large bearing on your marketing options. Does it
have good road access? It must be appealing to the
public if you are planning direct sales. If the crop
you grow requires a semi-truck for transportation, is
your farm able to handle it?
Access to labor. Many horticultural crops
are highly perishable and must be harvested and
marketed in a timely fashion. Access to reliable
and productive labor can mean the difference
between success and failure. Currently, access
to labor is becoming increasingly challenging
throughout agriculture. Will you be able to find
labor at the necessary time to harvest crops? Are you
comfortable managing labor? Are you willing and
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able to supervise and do the additional paperwork
involved with having employees? Can you pay for
labor before you are paid for your crop?
VI. Summary
Understanding your goals, physical resources,
and personal skills and resources, and doing your
homework on crop and marketing options, are
essential to making good decisions about what to do
with your small farm.
Small farms can be significant businesses, marked
by innovation and creativity. Many large enterprises
started from very modest beginnings. As with
any business, there are significant risks associated
with a commercial farm. Successful enterprises are
exceedingly well managed and focus on one or more
profitable marketing niches.
Small farm operators develop and sustain both
economic vitality and personal satisfaction by:
■■ Having a passion for what they do
■■ Producing crops for well-paying markets
■■ Paying close attention to cash flow and overall
financial performance
■■ Marketing aggressively and creatively
■■ Having an appetite for learning
■■ Understanding that there is a learning curve to
new enterprises and profitability takes time
■■ Investing in good soils and irrigation water
■■ Being strategic about equipment purchases
and able to do preventive maintenance
■■ Diversifying income streams, including off-
farm income, for financial sustainability
■■ Matching work to the family’s time, desires,
and abilities
To learn more about what you can do with your
small farm, including educational programs offered
by the OSU Small Farms Program, visit http://
smallfarms.oregonstate.edu/beginning-farmers/
whatcanidosmallfarm.

Two acres will produce a year’s supply of vegetables,
ample fruits and berries, some meat, and possible
opportunities for small cash sales. Another 2 acres of well-
managed woodlot can heat a well-constructed house
indefinitely.
Photo: Dana Martin, © Oregon State University
Appendix—Special Conditions in
Oregon
Agricultural deferral
The Oregon legislature has crafted a set of
laws designed to keep natural resource lands in
production. The laws provide a tax deferral (known
as “specially assessed valuations”) when certain
conditions are met. Farm properties are subject to
higher property taxes if they are not kept in farm
use. The agricultural property tax deferral lowers
the property tax of farms by basing the assessed
value on what the property is worth as a “bona fide
farm” rather than on investment or other nonfarm
considerations. The difference in property taxes can
be substantial depending on the location, zoning,
and other factors.
If your land is zoned as Exclusive Farm Use
(EFU) you only have to show that it is being farmed
“for the primary purpose of obtaining a profit in
money” (ORS 308A.056) to maintain an agricultural
deferral. There is not an income test. Some counties
require an application for the farm assessment in
EFU zones that states that the land is being farmed.
Others do not. Check with your county assessor.
Many small farms are located in areas that are
not zoned exclusively for farming, typically “rural
residential” land. In order to receive and maintain
the deferral, these “non-EFU” farms must meet
certain income tests. For some property owners,
15
this requirement results in the agricultural deferral
dilemma. People may end up spending $2,000 or
more in farm expenses to save only $1,000 on their
taxes.
These two Oregon Department of Revenue
websites give detailed information on both the EFU
and non-EFU programs:
■■ EFU: http://www.oregon.gov/DOR/
forms/FormsPubs/assessment-farmland-
zone_303-644.pdf
■■ Non-EFU: http://www.oregon.gov/DOR/
forms/FormsPubs/assessment-farmland-not-
zone_303-645.pdf
Both documents have one potentially confusing
paragraph that explains how the assessors put an
agricultural deferral value on agricultural land.
This does not relate to a specific property but rather
to a formula used to calculate specially assessed
valuations for agricultural land in general. This is not
something you, as the owner, need to be concerned
with.
To qualify for the non-EFU agricultural property
tax deferral, you must show a minimum annual farm
gross income, which varies by acreage:
0–6.5 acres: $650
6.51–29.99 acres: $100 per acre
30 or more acres: $3,000
You must demonstrate the minimum gross
income 3 out of 5 years. The assessor can request a
copy of the “Farm Schedule F” from your federal
income tax filing or other records you have kept to
evaluate your claim for deferral.
Here is a hypothetical situation with and without
a farm deferral, based on a typical tax rate (check
with your county assessor for your county’s specific
rate):
No deferral With deferral
Value of house $125,000 $125,000
Value of homesite $70,000 $70,000
Value of 10 acres $100,000 $5,000
Total $295,00 $200,000
 The difference is $95,000 in assessed or taxable
value. If the tax rate is $18 per $1,000 of assessed
value, you would pay $1,710 ($18 x 95) in additional
property tax if you don’t qualify for the ag deferral.
Note that the homesite, house, and most buildings
are not affected by the ag deferral, with some
exceptions in the EFU-zoned deferrals (again,
consult your assessor).
This example demonstrates the importance of
asking your assessor what the assessed value of
your land would be with and without the deferral.
Then you can do the above calculation on your own
property and decide where you come out.
Keep in mind that if you do take the ag deferral
and then convert all or part of your property from
farm to non-farm uses, you most likely will be
liable for back taxes on the difference between the
ag deferral value and market value assessments for
the previous 5 years, even if you just purchased the
property.
This is important to consider before you buy
property. Some counties “flag” that potential
obligation on their property assessment records so
that the potential for back taxes appears on the title
report received when property is purchased. Contact
the assessor about any potential issues on the
particular piece of property you are considering.
The EFU deferral (which does not have an
income test) is not connected to the income test that
a county might require before a dwelling can be built
on agricultural land. In fact, in some cases, building
on EFU land might disqualify you from an EFU
zone deferral.
Timber land deferral has a similar impact on
property taxes but doesn’t require annual income
proof after the stand is planted and “free to grow.”
There might be tax deferral incentives to manage
your property as wildlife habitat. Under the state’s
“Wildlife Habitat Conservation and Management
Program,” landowners can retain their agricultural
assessment when they enter into a management
agreement with the Oregon Department of Fish
and Wildlife. This program is entirely voluntary
for landowners, and not all counties participate. To
qualify, the property must be zoned as agriculture
or mixed farm and forest use and must be within a
participating county. Contact your assessor for more
information.

For more information and resources visit http://smallfarms.oregonstate.edu/.

Many OSU Extension Service publications may be viewed or downloaded from the Web. Visit the online
catalog at http://extension.oregonstate. edu/catalog/.

Cover photo: Lynn Ketchum, © Oregon State University

Special thanks to Chrissy Lucas for the graphic design of Figure 1.

© 2016 Oregon State University. This publication was produced and distributed in furtherance of the Acts of Congress of May 8 and June 30, 1914. Extension
work is a cooperative program of Oregon State University, the U.S. Department of Agriculture, and Oregon counties. Oregon State University Extension
Service offers educational programs, activities, and materials without discrimination based on age, color, disability, familial or parental status, gender identity
or expression, genetic information, marital status, national origin, political beliefs, race, religion, reprisal, sex, sexual orientation, veteran’s status, or because
all or a part of an individual’s income is derived from any public assistance program. Oregon State University Extension Service is an AA/EOE/Veterans/
Disabled.
Published March 2001. Revised February 2016.

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